II 

114TH CONGRESS 

1ST SESSION S. 1041 

To eliminate certain subsidies for fossil-fuel production. 

IN THE SENATE OF THE UNITED STATES 

APRIL 22, 2015 

Mr. SANDERS introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To eliminate certain subsidies for fossil-fuel production. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘End Polluter Welfare 

5 Act of 2015’’. 

6 SEC. 2. FINDINGS. 

7 Congress finds that— 

8 (1) President Obama joined other world leaders 

9 from the Group of Twenty in 2009, and again in 

10 2013, in pledging to phase out wasteful fossil-fuel 

11 subsidies; 


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1 (2) the Environmental Law Institute found that 

2 from 2002 through 2008, Federal fossil-fuel sub3 sidies in the United States totaled over 

4 $72,000,000,000, while Federal renewable-energy in5 vestments totaled $12,200,000,000; 

6 (3) according to Taxpayers for Common Sense, 

7 the 5 largest oil corporations have made more than 

8 $1,000,000,000,000 in profits during the past dec9 ade; 

10 (4) according to the Center for American 

11 Progress, the 5 largest oil corporations posted more 

12 than $89,700,000,000 in profits in 2014 alone; 

13 (5) according to the Center for Responsive Poli14 tics, the oil and gas, coal, utility, and other natural 

15 resource extraction industries spent more than 

16 $1,800,000,000 on lobbying during the period of 

17 2010 to 2014, which was an effective investment in 

18 protecting their extraordinary tax loopholes and sub19 sidies; and 

20 (6) it is not in the national interest for tax21 payers in the United States to subsidize highly prof22 itable, polluting fossil-fuel companies. 


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1 SEC. 3. DEFINITION OF FOSSIL FUEL. 

2 In this Act, the term ‘‘fossil fuel’’ means coal, petro3 leum, natural gas, or any derivative of coal, petroleum, 

4 or natural gas that is used for fuel. 

5 SEC. 4. ROYALTY RELIEF. 

6 (a) IN GENERAL.— 

7 (1) OUTER CONTINENTAL SHELF LANDS ACT.— 

8 Section 8(a)(3) of the Outer Continental Shelf 

9 Lands Act (43 U.S.C. 1337(a)(3)) is amended— 

10 (A) by striking subparagraph (B); and 

11 (B) by redesignating subparagraph (C) as 

12 subparagraph (B). 

13 (2) ENERGY POLICY ACT OF 2005.— 

14 (A) INCENTIVES FOR NATURAL GAS PRO15 DUCTION FROM DEEP WELLS IN THE SHALLOW

16 WATERS OF THE GULF OF MEXICO.—Section 

17 344 of the Energy Policy Act of 2005 (42 

18 U.S.C. 15904) is repealed. 

19 (B) DEEP WATER PRODUCTION.—Section 

20 345 of the Energy Policy Act of 2005 (42 

21 U.S.C. 15905) is repealed. 

22 (b) FUTURE PROVISIONS.—Notwithstanding any 

23 other provision of law (including regulations), royalty re24 lief shall not be permitted under a lease issued under sec25 tion 8 of the Outer Continental Shelf Lands Act (43 

26 U.S.C. 1337). 


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1 SEC. 5. ROYALTIES UNDER MINERAL LEASING ACT. 

2 (a) COAL LEASES.—Section 7(a) of the Mineral 

3 Leasing Act (30 U.S.C. 207(a)) is amended by striking 

‘‘121⁄2’’ and inserting ‘‘183 4 ⁄4’’. 

5 (b) LEASES ON LAND ON WHICH OIL OR NATURAL

6 GAS IS DISCOVERED.—Section 14 of the Mineral Leasing 

Act (30 U.S.C. 223) is amended by striking ‘‘121 7 ⁄2’’ and 

inserting ‘‘183 8 ⁄4’’. 

9 (c) LEASES ON LAND KNOWN OR BELIEVED TO

10 CONTAIN OIL OR NATURAL GAS.—Section 17 of the Min11 eral Leasing Act (30 U.S.C. 226) is amended— 

12 (1) in subsection (b)— 

13 (A) in paragraph (1)(A), by striking 

‘‘12.5’’ and inserting ‘‘183 14 ⁄4’’; and 

15 (B) in paragraph (2)(A)(ii), by striking 

‘‘121⁄2’’ and inserting ‘‘183 16 ⁄4’’; 

17 (2) in subsection (c)(1), by striking ‘‘12.5’’ and 

inserting ‘‘183 18 ⁄4’’; 

(3) in subsection (l), by striking ‘‘121 19 ⁄2’’ each 

time it appears and inserting ‘‘183 20 ⁄4’’; and 

(4) in subsection (n)(1)(C), by striking ‘‘121 21 ⁄2’’ 

and inserting ‘‘183 22 ⁄4’’. 

23 SEC. 6. ELIMINATION OF INTEREST PAYMENTS FOR ROY24 ALTY OVERPAYMENTS. 

25 Section 111 of the Federal Oil and Gas Royalty Man26 agement Act of 1982 (30 U.S.C. 1721) is amended— 


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1 (1) by striking subsections (h) and (i) and in2 serting the following: 

3 ‘‘(h) PAYMENT OF INTEREST.—Interest shall not be 

4 paid on any overpayment.’’; and 

5 (2) by redesignating subsections (j), (k), and (l) 

6 as subsections (i), (j), and (k), respectively. 

7 SEC. 7. REMOVAL OF LIMITS ON LIABILITY FOR OFFSHORE 

8 FACILITIES AND PIPELINE OPERATORS. 

9 Section 1004(a) of the Oil Pollution Act of 1990 (33 

10 U.S.C. 2704(a)) is amended— 

11 (1) in paragraph (3), by striking ‘‘plus 

12 $75,000,000; and’’ and inserting ‘‘and the liability 

13 of the responsible party under section 1002;’’; 

14 (2) in paragraph (4)— 

15 (A) by inserting ‘‘(except an onshore pipe16 line transporting diluted bitumen, bituminous 

17 mixtures, or any oil manufactured from bitu18 men)’’ after ‘‘for any onshore facility’’; and 

19 (B) by striking the period at the end and 

20 inserting ‘‘; and’’; and 

21 (3) by adding at the end the following: 

22 ‘‘(5) for any onshore facility transporting di23 luted bitumen, bituminous mixtures, or any oil man24 ufactured from bitumen, the liability of the respon25 sible party under section 1002.’’. 


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1 SEC. 8. FUNDS TO WORLD BANK FOR FINANCING 

2 PROJECTS THAT SUPPORT FOSSIL FUEL. 

3 (a) RESCISSION OF FUNDS.—Except as provided in 

4 subsection (c), effective on the date of enactment of this 

5 Act, there are rescinded all unobligated balances of the 

6 amounts made available to the International Bank for Re7 construction and Development and the International De8 velopment Association (commonly known as the ‘‘World 

9 Bank’’), and each other similar international financing en10 tity that has received amounts from the United States, 

11 as determined by the Secretary of the Treasury, to carry 

12 out any project that supports fossil-fueled power plants. 

13 (b) FUTURE FUNDS.—Except as provided in sub14 section (c), notwithstanding any other provision of law, 

15 any amounts made available to the World Bank or any 

16 other international financing entity shall not be used to 

17 carry out any project that supports fossil fuel. 

18 (c) EXCEPTION.—Subsections (a) and (b) shall not 

19 apply to a fossil-fueled power plant project located in a 

20 Least Developed Country (as that term is defined by the 

21 United Nations General Assembly), on the condition 

22 that— 

23 (1) no other economically feasible alternative 

24 exists; and 

25 (2) the project uses the most efficient tech26 nology available. 


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1 SEC. 9. OFFICE OF FOSSIL ENERGY RESEARCH AND DEVEL2 OPMENT. 

3 (a) IN GENERAL.—Section 203(a)(2) of the Depart4 ment of Energy Organization Act (42 U.S.C. 7133(a)(2)) 

5 is amended— 

6 (1) in subparagraph (C), by inserting ‘‘and’’ 

7 after the semicolon at the end; 

8 (2) by striking subparagraph (D); and 

9 (3) by redesignating subparagraph (E) as sub10 paragraph (D). 

11 (b) TERMINATION.—Notwithstanding any other pro12 vision of law, the Office of Fossil Energy Research and 

13 Development and the authority to carry out any program 

14 or activity of the Office (as in existence on the day before 

15 the date of enactment of this Act) is terminated. 

16 SEC. 10. ADVANCED RESEARCH PROJECTS AGENCY—EN17 ERGY. 

18 None of the funds made available to the Advanced 

19 Research Projects Agency—Energy shall be used to carry 

20 out any project that supports fossil fuel. 

21 SEC. 11. INCENTIVES FOR INNOVATIVE TECHNOLOGIES. 

22 (a) IN GENERAL.—Section 1703 of the Energy Policy 

23 Act of 2005 (42 U.S.C. 16513) is amended— 

24 (1) in subsection (b)— 

25 (A) by striking paragraph (2); 

26 (B) by striking paragraph (10); and 


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1 (C) by redesignating paragraphs (3) 

2 through (9) as paragraphs (2) through (8) re3 spectively; 

4 (2) by striking subsection (c); and 

5 (3) by redesignating subsections (d) and (e) as 

6 paragraphs (c) and (d) respectively. 

7 (b) CONFORMING AMENDMENT.—Section 1704 of the 

8 Energy Policy Act of 2005 (42 U.S.C. 16514) is amend9 ed— 

10 (1) in subsection (a), by striking ‘‘(a) IN GEN11 ERAL.—’’; and 

12 (2) by striking subsection (b). 

13 SEC. 12. RURAL UTILITY SERVICE LOAN GUARANTEES. 

14 The Secretary of Agriculture shall not make a loan 

15 under title III of the Rural Electrification Act of 1936 

16 (7 U.S.C. 931 et seq.) to an applicant for the purpose 

17 of carrying out any project that will use fossil fuel. 

18 SEC. 13. FUNDS TO THE OVERSEAS PRIVATE INVESTMENT 

19 CORPORATION OR THE EXPORT-IMPORT 

20 BANK OF THE UNITED STATES FOR FINANC21 ING PROJECTS, TRANSACTIONS, OR OTHER 

22 ACTIVITIES THAT SUPPORT FOSSIL FUEL. 

23 (a) RESCISSION OF FUNDS.—Except as provided in 

24 subsection (c), effective on the date of enactment of this 

25 Act, there are rescinded all unobligated balances of the 


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1 amounts made available to the Overseas Private Invest2 ment Corporation or the Export-Import Bank of the 

3 United States to carry out any project, transaction, or 

4 other activity that supports fossil-fuel production or use. 

5 (b) FUTURE FUNDS.—Except as provided in sub6 section (c), notwithstanding any other provision of law, 

7 any amounts made available to the Overseas Private In8 vestment Corporation or the Export-Import Bank of the 

9 United States shall not be used to carry out any project, 

10 transaction, or other activity that supports fossil-fuel pro11 duction or use. 

12 (c) EXCEPTION.—Subsections (a) and (b) shall not 

13 apply to a fossil-fueled power plant project located in a 

14 Least Developed Country (as that term is defined by the 

15 United Nations General Assembly), on the condition 

16 that— 

17 (1) no other economically feasible alternative 

18 exists; and 

19 (2) the project uses the most efficient tech20 nology available. 

21 SEC. 14. TRANSPORTATION FUNDS FOR GRANTS, LOANS, 

22 LOAN GUARANTEES, AND OTHER DIRECT AS23 SISTANCE. 

24 Notwithstanding any other provision of law, any 

25 amounts made available to the Department of TransporVerDate Sep 11 2014 01:13 May 05, 2015 Jkt 049200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\S1041.IS S1041

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1 tation (including the Federal Railroad Administration) 

2 shall not be used to award any grant, loan, loan guarantee, 

3 or provide any other direct assistance to any rail or port 

4 project that transports fossil fuel. 

5 SEC. 15. TERMINATION OF VARIOUS TAX EXPENDITURES 

6 RELATING TO FOSSIL FUELS. 

7 (a) IN GENERAL.—Subchapter C of chapter 80 of the 

8 Internal Revenue Code of 1986 is amended by adding at 

9 the end the following new section: 

10 ‘‘SEC. 7875. TERMINATION OF CERTAIN PROVISIONS RELAT11 ING TO FOSSIL-FUEL INCENTIVES. 

12 ‘‘(a) IN GENERAL.—The following provisions shall 

13 not apply to taxable years beginning after the date of the 

14 enactment of the End Polluter Welfare Act of 2015: 

15 ‘‘(1) Section 43 (relating to enhanced oil recov16 ery credit). 

17 ‘‘(2) Section 45I (relating to credit for pro18 ducing oil and natural gas from marginal wells). 

19 ‘‘(3) Section 45K (relating to credit for pro20 ducing fuel from a nonconventional source). 

21 ‘‘(4) Section 193 (relating to tertiary 

22 injectants). 

23 ‘‘(5) Section 199(d)(9) (relating to special rule 

24 for taxpayers with oil related qualified production 

25 activities income). 


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1 ‘‘(6) Section 461(i)(2) (relating to special rule 

2 for spudding of oil or natural gas wells). 

3 ‘‘(7) Section 469(c)(3) (relating to working in4 terests in oil and natural gas property). 

5 ‘‘(8) Section 613A (relating to limitations on 

6 percentage depletion in case of oil and natural gas 

7 wells). 

8 ‘‘(9) Section 617 (relating to deduction and re9 capture of certain mining exploration expenditures). 

10 ‘‘(b) PROVISIONS RELATING TO PROPERTY.—The 

11 following provisions shall not apply to property placed in 

12 service after the date of the enactment of the End Polluter 

13 Welfare Act of 2015: 

14 ‘‘(1) Subparagraph (C)(iii) of section 168(e)(3) 

15 (relating to classification of certain property). 

16 ‘‘(2) Section 169 (relating to amortization of 

17 pollution control facilities) with respect to any at18 mospheric pollution control facility. 

19 ‘‘(c) PROVISIONS RELATING TO COSTS AND EX20 PENSES.—The following provisions shall not apply to costs 

21 or expenses paid or incurred after the date of the enact22 ment of the End Polluter Welfare Act of 2015: 

23 ‘‘(1) Section 179B (relating to deduction for 

24 capital costs incurred in complying with Environ25 mental Protection Agency sulfur regulations). 


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1 ‘‘(2) Section 263(c) (relating to intangible drill2 ing and development costs) with respect to costs in 

3 the case of oil and natural gas wells. 

4 ‘‘(3) Section 468 (relating to special rules for 

5 mining and solid waste reclamation and closing 

6 costs). 

7 ‘‘(d) 5-YEAR CARRYBACK FOR MARGINAL OIL AND

8 NATURAL GAS WELL PRODUCTION CREDIT.—Section 

9 39(a)(3) (relating to 5-year carryback for marginal oil and 

10 natural gas well production credit) shall not apply to cred11 its determined in taxable years beginning after the date 

12 of the enactment of the End Polluter Welfare Act of 2015. 

13 ‘‘(e) CREDIT FOR CARBON DIOXIDE SEQUESTRA14 TION.—Section 45Q (relating to credit for carbon dioxide 

15 sequestration) shall not apply to carbon dioxide captured 

16 after the date of the enactment of the End Polluter Wel17 fare Act of 2015. 

18 ‘‘(f) ALLOCATED CREDITS.—No new credits shall be 

19 certified under section 48A (relating to qualifying ad20 vanced coal project credit) or section 48B (relating to 

21 qualifying gasification project credit) after the date of the 

22 enactment of the End Polluter Welfare Act of 2015. 

23 ‘‘(g) ARBITRAGE BONDS.—Section 148(b)(4) (relat24 ing to safe harbor for prepaid natural gas) shall not apply 


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1 to obligations issued after the date of the enactment of 

2 the End Polluter Welfare Act of 2015.’’. 

3 (b) CONFORMING AMENDMENT.—The table of sec4 tions for subchapter C of chapter 90 is amended by adding 

5 at the end the following new item: 

‘‘Sec. 7875. Termination of certain provisions.’’. 

6 SEC. 16. UNIFORM SEVEN-YEAR AMORTIZATION FOR GEO7 LOGICAL AND GEOPHYSICAL EXPENDITURES. 

8 (a) IN GENERAL.—Section 167(h) of the Internal 

9 Revenue Code of 1986 is amended— 

10 (1) by striking ‘‘24-month period’’ each place it 

11 appears in paragraphs (1) and (4) and inserting ‘‘7- 

12 year period’’, and 

13 (2) by striking paragraph (5). 

14 (b) EFFECTIVE DATE.—The amendments made by 

15 this section shall apply to amounts paid or incurred after 

16 the date of the enactment of this Act. 

17 SEC. 17. NATURAL GAS GATHERING LINES TREATED AS 15- 

18 YEAR PROPERTY. 

19 (a) IN GENERAL.—Subparagraph (E) of section 

20 168(e)(3) of the Internal Revenue Code of 1986 is amend21 ed by striking ‘‘and’’ at the end of clause (viii), by striking 

22 the period at the end of clause (ix) and inserting ‘‘, and’’, 

23 and by adding at the end the following new clause: 

24 ‘‘(x) any natural gas gathering line 

25 the original use of which commences with 


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1 the taxpayer after the date of the enact2 ment of this clause.’’. 

3 (b) ALTERNATIVE SYSTEM.—The table contained in 

4 section 168(g)(3)(B) of the Internal Revenue Code of 

5 1986 is amended by inserting after the item relating to 

6 subparagraph (E)(ix) the following new item: 

‘‘(E)(x) .................................................................................................... 22’’. 

7 (c) CONFORMING AMENDMENT.—Clause (iv) of sec8 tion 168(e)(3)(C) of the Internal Revenue Code of 1986 

9 is amended by inserting ‘‘and on or before the date of the 

10 enactment of the End Polluter Welfare Act of 2015’’ after 

11 ‘‘April 11, 2005’’. 

12 (d) EFFECTIVE DATE.— 

13 (1) IN GENERAL.—The amendments made by 

14 this section shall apply to property placed in service 

15 on and after the date of the enactment of this Act. 

16 (2) EXCEPTION.—The amendments made by 

17 this section shall not apply to any property with re18 spect to which the taxpayer or a related party has 

19 entered into a binding contract for the construction 

20 thereof on or before the date of the enactment of 

21 this Act, or, in the case of self-constructed property, 

22 has started construction on or before such date. 


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1 SEC. 18. REPEAL OF DOMESTIC MANUFACTURING DEDUC2 TION FOR HARD MINERAL MINING. 

3 (a) IN GENERAL.—Subparagraph (B) of section 

4 199(c)(4) of the Internal Revenue Code of 1986 is amend5 ed by striking ‘‘or’’ at the end of clause (ii), by striking 

6 the period at the end of clause (iii) and inserting ‘‘, or’’, 

7 and by adding at the end the following new clause: 

8 ‘‘(iv) the mining of any hard min9 eral.’’. 

10 (b) EFFECTIVE DATE.—The amendments made by 

11 this section shall apply to taxable years beginning after 

12 the date of the enactment of this Act. 

13 SEC. 19. LIMITATION ON DEDUCTION FOR INCOME ATTRIB14 UTABLE TO DOMESTIC PRODUCTION OF OIL, 

15 NATURAL GAS, OR PRIMARY PRODUCTS 

16 THEREOF. 

17 (a) DENIAL OF DEDUCTION.—Paragraph (4) of sec18 tion 199(c) of the Internal Revenue Code of 1986 is 

19 amended by adding at the end the following new subpara20 graph: 

21 ‘‘(E) SPECIAL RULE FOR OIL, NATURAL

22 GAS, AND COAL INCOME.—The term ‘domestic 

23 production gross receipts’ shall not include 

24 gross receipts from the production, refining, 

25 processing, transportation, or distribution of oil, 

26 natural gas, or coal, or any primary product 


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1 (within the meaning of subsection (d)(9)) there2 of.’’. 

3 (b) EFFECTIVE DATE.—The amendment made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 20. TERMINATION OF LAST-IN, FIRST-OUT METHOD OF 

7 INVENTORY FOR OIL, NATURAL GAS, AND 

8 COAL COMPANIES. 

9 (a) IN GENERAL.—Section 472 of the Internal Rev10 enue Code of 1986 is amended by adding at the end the 

11 following new subsection: 

12 ‘‘(h) TERMINATION FOR OIL, NATURAL GAS, AND

13 COAL COMPANIES.—Subsection (a) shall not apply to any 

14 taxpayer that is in the trade or business of the production, 

15 refining, processing, transportation, or distribution of oil, 

16 natural gas, or coal for any taxable year beginning after 

17 the date of enactment of the End Polluter Welfare Act 

18 of 2015.’’. 

19 (b) ADDITIONAL TERMINATION.—Section 473 of the 

20 Internal Revenue Code of 1986 is amended by adding at 

21 the end the following new subsection: 

22 ‘‘(h) TERMINATION FOR OIL, NATURAL GAS, AND

23 COAL COMPANIES.—This section shall not apply to any 

24 taxpayer that is in the trade or business of the production, 

25 refining, processing, transportation, or distribution of oil, 


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1 natural gas, or coal for any taxable year beginning after 

2 the date of enactment of the End Polluter Welfare Act 

3 of 2015.’’. 

4 (c) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply to taxable years beginning after 

6 the date of enactment of this Act. 

7 SEC. 21. REPEAL OF PERCENTAGE DEPLETION FOR COAL 

8 AND HARD MINERAL FOSSIL FUELS. 

9 (a) IN GENERAL.—Section 613 of the Internal Rev10 enue Code of 1986 is amended by adding at the end the 

11 following new subsection: 

12 ‘‘(f) TERMINATION WITH RESPECT TO COAL AND

13 HARD MINERAL FOSSIL FUELS.—In the case of coal, lig14 nite, and oil shale (other than oil shale described in sub15 section (b)(5)), the allowance for depletion shall be com16 puted without reference to this section for any taxable 

17 year beginning after the date of the enactment of the End 

18 Polluter Welfare Act of 2015.’’. 

19 (b) CONFORMING AMENDMENTS.— 

20 (1) COAL AND LIGNITE.—Section 613(b)(4) of 

21 the Internal Revenue Code of 1986 is amended by 

22 striking ‘‘coal, lignite,’’. 

23 (2) OIL SHALE.—Section 613(b)(2) of such 

24 Code is amended to read as follows: 


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1 ‘‘(2) 15 PERCENT.—If, from deposits in the 

2 United States, gold, silver, copper, and iron ore.’’. 

3 (c) EFFECTIVE DATE.—The amendments made by 

4 this section shall apply to taxable years beginning after 

5 the date of the enactment of this Act. 

6 SEC. 22. TERMINATION OF CAPITAL GAINS TREATMENT 

7 FOR ROYALTIES FROM COAL. 

8 (a) IN GENERAL.—Subsection (c) of section 631 of 

9 the Internal Revenue Code of 1986 is amended— 

10 (1) by striking ‘‘coal (including lignite), or iron 

11 ore’’ and inserting ‘‘iron ore’’, 

12 (2) by striking ‘‘coal or iron ore’’ each place it 

13 appears and inserting ‘‘iron ore’’, 

14 (3) by striking ‘‘iron ore or coal’’ each place it 

15 appears and inserting ‘‘iron ore’’, and 

16 (4) by striking ‘‘COAL OR’’ in the heading. 

17 (b) CONFORMING AMENDMENT.—The heading of sec18 tion 631 of the Internal Revenue Code of 1986 is amended 

19 by striking ‘‘, COAL,’’. 

20 (c) EFFECTIVE DATE.—The amendments made by 

21 this section shall apply to dispositions after the date of 

22 the enactment of this Act. 


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1 SEC. 23. MODIFICATIONS OF FOREIGN TAX CREDIT RULES 

2 APPLICABLE TO OIL, NATURAL GAS, AND 

3 COAL COMPANIES WHICH ARE DUAL CAPAC4 ITY TAXPAYERS. 

5 (a) IN GENERAL.—Section 901 of the Internal Rev6 enue Code of 1986 is amended by redesignating subsection 

7 (n) as subsection (o) and by inserting after subsection (m) 

8 the following new subsection: 

9 ‘‘(n) SPECIAL RULES RELATING TO OIL, NATURAL

10 GAS, AND COAL COMPANIES WHICH ARE DUAL CAPACITY

11 TAXPAYERS.— 

12 ‘‘(1) GENERAL RULE.—Notwithstanding any 

13 other provision of this chapter, any amount paid or 

14 accrued to a foreign country or possession of the 

15 United States for any period by a dual capacity tax16 payer which is in the trade or business of the pro17 duction, refining, processing, transportation, or dis18 tribution of oil, natural gas, or coal shall not be con19 sidered a tax— 

20 ‘‘(A) if, for such period, the foreign coun21 try or possession does not impose a generally 

22 applicable income tax, or 

23 ‘‘(B) to the extent such amount exceeds 

24 the amount (determined in accordance with reg25 ulations) which— 


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1 ‘‘(i) is paid by such dual capacity tax2 payer pursuant to the generally applicable 

3 income tax imposed by the country or pos4 session, or 

5 ‘‘(ii) would be paid if the generally ap6 plicable income tax imposed by the country 

7 or possession were applicable to such dual 

8 capacity taxpayer. 

9 Nothing in this paragraph shall be construed to 

10 imply the proper treatment of any such amount not 

11 in excess of the amount determined under subpara12 graph (B). 

13 ‘‘(2) DUAL CAPACITY TAXPAYER.—For pur14 poses of this subsection, the term ‘dual capacity tax15 payer’ means, with respect to any foreign country or 

16 possession of the United States, a person who— 

17 ‘‘(A) is subject to a levy of such country or 

18 possession, and 

19 ‘‘(B) receives (or will receive) directly or 

20 indirectly a specific economic benefit (as deter21 mined in accordance with regulations) from 

22 such country or possession. 

23 ‘‘(3) GENERALLY APPLICABLE INCOME TAX.— 

24 For purposes of this subsection— 


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1 ‘‘(A) IN GENERAL.—The term ‘generally 

2 applicable income tax’ means an income tax (or 

3 a series of income taxes) which is generally im4 posed under the laws of a foreign country or 

5 possession on income derived from the conduct 

6 of a trade or business within such country or 

7 possession. 

8 ‘‘(B) EXCEPTIONS.—Such term shall not 

9 include a tax unless it has substantial applica10 tion, by its terms and in practice, to— 

11 ‘‘(i) persons who are not dual capacity 

12 taxpayers, and 

13 ‘‘(ii) persons who are citizens or resi14 dents of the foreign country or posses15 sion.’’. 

16 (b) EFFECTIVE DATE.— 

17 (1) IN GENERAL.—The amendments made by 

18 this section shall apply to taxes paid or accrued in 

19 taxable years beginning after the date of the enact20 ment of this Act. 

21 (2) CONTRARY TREATY OBLIGATIONS

22 UPHELD.—The amendments made by this section 

23 shall not apply to the extent contrary to any treaty 

24 obligation of the United States. 


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1 SEC. 24. INCREASE IN OIL SPILL LIABILITY TRUST FUND FI2 NANCING RATE. 

3 (a) IN GENERAL.—Subparagraph (B) of section 

4 4611(c)(2) of the Internal Revenue Code of 1986 is 

5 amended to read as follows: 

6 ‘‘(B) the Oil Spill Liability Trust Fund fi7 nancing rate is— 

8 ‘‘(i) in the case of crude oil received 

9 or petroleum products entered before Jan10 uary 1, 2016, 8 cents a barrel, 

11 ‘‘(ii) in the case of crude oil received 

12 or petroleum products entered after De13 cember 31, 2015, and before January 1, 

14 2017, 9 cents a barrel, and 

15 ‘‘(iii) in the case of crude oil received 

16 or petroleum products entered after De17 cember 31, 2016, 10 cents a barrel.’’. 

18 (b) EFFECTIVE DATE.—The amendment made by 

19 this section shall apply to crude oil received and petroleum 

20 products entered after the date of the enactment of this 

21 Act. 

22 SEC. 25. APPLICATION OF CERTAIN ENVIRONMENTAL 

23 TAXES TO SYNTHETIC CRUDE OIL. 

24 (a) IN GENERAL.—Paragraph (1) of section 4612(a) 

25 of the Internal Revenue Code of 1986 is amended to read 

26 as follows: 


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1 ‘‘(1) CRUDE OIL.— 

2 ‘‘(A) IN GENERAL.—The term ‘crude oil’ 

3 includes crude oil condensates, natural gasoline, 

4 and synthetic crude oil. 

5 ‘‘(B) SYNTHETIC CRUDE OIL.—For pur6 poses of subparagraph (A), the term ‘synthetic 

7 crude oil’ means any bitumen and bituminous 

8 mixtures, any oil manufactured from bitumen 

9 and bituminous mixtures, and any liquid fuel 

10 manufactured from coal.’’. 

11 (b) EFFECTIVE DATE.—The amendment made by 

12 this section shall apply to oil and petroleum products re13 ceived or entered during calendar quarters beginning more 

14 than 60 days after the date of the enactment of this Act. 

15 SEC. 26. DENIAL OF DEDUCTION FOR REMOVAL COSTS AND 

16 DAMAGES FOR CERTAIN OIL SPILLS. 

17 (a) IN GENERAL.—Part IX of subchapter B of chap18 ter 1 of the Internal Revenue Code of 1986 is amended 

19 by adding at the end the following new section: 

20 ‘‘SEC. 280I. EXPENSES FOR REMOVAL COSTS AND DAMAGES 

21 RELATING TO CERTAIN OIL SPILL LIABILITY. 

22 ‘‘No deduction shall be allowed under this chapter for 

23 any amount paid or incurred with respect to any costs or 

24 damages for which the taxpayer is liable under section 

25 1002 of the Oil Pollution Act of 1990 (33 U.S.C. 2702).’’. 


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1 (b) CLERICAL AMENDMENT.—The table of sections 

2 for part IX of subchapter B of chapter 1 of such Code 

3 is amended by adding at the end the following new item: 

‘‘Sec. 280I. Expenses for removal costs and damages relating to certain oil spill 

liability.’’. 

4 (c) EFFECTIVE DATE.—The amendments made by 

5 this section shall apply with respect to any liability arising 

6 in taxable years ending after the date of the enactment 

7 of this Act. 

8 SEC. 27. TAX ON CRUDE OIL AND NATURAL GAS PRODUCED 

9 FROM THE OUTER CONTINENTAL SHELF IN 

10 THE GULF OF MEXICO. 

11 (a) IN GENERAL.—Subtitle E of the Internal Rev12 enue Code of 1986 is amended by adding at the end the 

13 following new chapter: 

14 ‘‘CHAPTER 56—TAX ON SEVERANCE OF 

15 CRUDE OIL AND NATURAL GAS FROM 

16 THE OUTER CONTINENTAL SHELF IN 

17 THE GULF OF MEXICO 

‘‘Sec. 5901. Imposition of tax. 

‘‘Sec. 5902. Taxable crude oil or natural gas and removal price. 

‘‘Sec. 5903. Special rules and definitions. 

18 ‘‘SEC. 5901. IMPOSITION OF TAX. 

19 ‘‘(a) IN GENERAL.—In addition to any other tax im20 posed under this title, there is hereby imposed a tax equal 

21 to 13 percent of the removal price of any taxable crude 


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1 oil or natural gas removed from the premises during any 

2 taxable period. 

3 ‘‘(b) CREDIT FOR FEDERAL ROYALTIES PAID.— 

4 ‘‘(1) IN GENERAL.—There shall be allowed as a 

5 credit against the tax imposed by subsection (a) with 

6 respect to the production of any taxable crude oil or 

7 natural gas an amount equal to the aggregate 

8 amount of royalties paid under Federal law with re9 spect to such production. 

10 ‘‘(2) LIMITATION.—The aggregate amount of 

11 credits allowed under paragraph (1) to any taxpayer 

12 for any taxable period shall not exceed the amount 

13 of tax imposed by subsection (a) for such taxable pe14 riod. 

15 ‘‘(c) TAX PAID BY PRODUCER.—The tax imposed by 

16 this section shall be paid by the producer of the taxable 

17 crude oil or natural gas. 

18 ‘‘SEC. 5902. TAXABLE CRUDE OIL OR NATURAL GAS AND RE19 MOVAL PRICE. 

20 ‘‘(a) TAXABLE CRUDE OIL OR NATURAL GAS.—For 

21 purposes of this chapter, the term ‘taxable crude oil or 

22 natural gas’ means crude oil or natural gas which is pro23 duced from Federal submerged lands on the outer Conti24 nental Shelf in the Gulf of Mexico pursuant to a lease 


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1 entered into with the United States which authorizes the 

2 production. 

3 ‘‘(b) REMOVAL PRICE.—For purposes of this chap4 ter— 

5 ‘‘(1) IN GENERAL.—Except as otherwise pro6 vided in this subsection, the term ‘removal price’ 

7 means— 

8 ‘‘(A) in the case of taxable crude oil, the 

9 amount for which a barrel of such crude oil is 

10 sold, and 

11 ‘‘(B) in the case of taxable natural gas, the 

12 amount per 1,000 cubic feet for which such 

13 natural gas is sold. 

14 ‘‘(2) SALES BETWEEN RELATED PERSONS.—In 

15 the case of a sale between related persons, the re16 moval price shall not be less than the constructive 

17 sales price for purposes of determining gross income 

18 from the property under section 613. 

19 ‘‘(3) OIL OR NATURAL GAS REMOVED FROM

20 PROPERTY BEFORE SALE.—If crude oil or natural 

21 gas is removed from the property before it is sold, 

22 the removal price shall be the constructive sales 

23 price for purposes of determining gross income from 

24 the property under section 613. 


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1 ‘‘(4) REFINING BEGUN ON PROPERTY.—If the 

2 manufacture or conversion of crude oil into refined 

3 products begins before such oil is removed from the 

4 property— 

5 ‘‘(A) such oil shall be treated as removed 

6 on the day such manufacture or conversion be7 gins, and 

8 ‘‘(B) the removal price shall be the con9 structive sales price for purposes of determining 

10 gross income from the property under section 

11 613. 

12 ‘‘(5) PROPERTY.—The term ‘property’ has the 

13 meaning given such term by section 614. 

14 ‘‘SEC. 5903. SPECIAL RULES AND DEFINITIONS. 

15 ‘‘(a) ADMINISTRATIVE REQUIREMENTS.— 

16 ‘‘(1) WITHHOLDING AND DEPOSIT OF TAX.— 

17 The Secretary shall provide for the withholding and 

18 deposit of the tax imposed under section 5901 on a 

19 quarterly basis. 

20 ‘‘(2) RECORDS AND INFORMATION.—Each tax21 payer liable for tax under section 5901 shall keep 

22 such records, make such returns, and furnish such 

23 information (to the Secretary and to other persons 

24 having an interest in the taxable crude oil or natural 


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1 gas) with respect to such oil as the Secretary may 

2 by regulations prescribe. 

3 ‘‘(3) TAXABLE PERIODS; RETURN OF TAX.— 

4 ‘‘(A) TAXABLE PERIOD.—Except as pro5 vided by the Secretary, each calendar year shall 

6 constitute a taxable period. 

7 ‘‘(B) RETURNS.—The Secretary shall pro8 vide for the filing, and the time for filing, of the 

9 return of the tax imposed under section 5901. 

10 ‘‘(b) DEFINITIONS.—For purposes of this chapter— 

11 ‘‘(1) PRODUCER.—The term ‘producer’ means 

12 the holder of the economic interest with respect to 

13 the crude oil or natural gas. 

14 ‘‘(2) CRUDE OIL.—The term ‘crude oil’ includes 

15 crude oil condensates and natural gasoline. 

16 ‘‘(3) PREMISES AND CRUDE OIL PRODUCT.— 

17 The terms ‘premises’ and ‘crude oil product’ have 

18 the same meanings as when used for purposes of de19 termining gross income from the property under sec20 tion 613. 

21 ‘‘(c) ADJUSTMENT OF REMOVAL PRICE.—In deter22 mining the removal price of oil or natural gas from a prop23 erty in the case of any transaction, the Secretary may ad24 just the removal price to reflect clearly the fair market 

25 value of oil or natural gas removed. 


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1 ‘‘(d) REGULATIONS.—The Secretary shall prescribe 

2 such regulations as may be necessary or appropriate to 

3 carry out the purposes of this chapter.’’. 

4 (b) DEDUCTIBILITY OF TAX.—The first sentence of 

5 section 164(a) of the Internal Revenue Code of 1986 is 

6 amended by inserting after paragraph (4) the following 

7 new paragraph: 

8 ‘‘(5) The tax imposed by section 5901(a) (after 

9 application of section 5901(b)) on the severance of 

10 crude oil or natural gas from the outer Continental 

11 Shelf in the Gulf of Mexico.’’. 

12 (c) CLERICAL AMENDMENT.—The table of chapters 

13 for subtitle E is amended by adding at the end the fol14 lowing new item: 

‘‘CHAPTER 56. Tax on severance of crude oil and natural gas 

from the outer Continental Shelf in the Gulf of 

Mexico.’’. 

15 (d) EFFECTIVE DATE.—The amendments made by 

16 this section shall apply to crude oil or natural gas removed 

17 after December 31, 2015. 

18 SEC. 28. REPEAL OF CORPORATE INCOME TAX EXEMPTION 

19 FOR PUBLICLY TRADED PARTNERSHIPS 

20 WITH QUALIFYING INCOME AND GAINS FROM 

21 ACTIVITIES RELATING TO FOSSIL FUELS. 

22 (a) IN GENERAL.—Section 7704(d)(1) of the Inter23 nal Revenue Code of 1986 is amended— 

24 (1) by striking subparagraph (E), 


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1 (2) by redesignating subparagraphs (F) and 

2 (G) as subparagraphs (E) and (F), respectively, and 

3 (3) by striking the flush matter at the end. 

4 (b) CONFORMING AMENDMENT.—Section 

5 988(c)(1)(E)(iii)(III) of the Internal Revenue Code of 

6 1986 is amended by striking ‘‘or (G)’’ and inserting ‘‘or 

7 (F)’’. 

8 (c) EFFECTIVE DATE.—The amendments made by 

9 this section shall apply to taxable years beginning after 

10 the date of the enactment of this Act. 

11 SEC. 29. POWDER RIVER BASIN. 

12 (a) DESIGNATION OF THE POWDER RIVER BASIN AS

13 A COAL PRODUCING REGION.—The Director of the Bu14 reau of Land Management shall designate the Powder 

15 River Basin as a coal producing region. 

16 (b) REPORT.—Not later than 1 year after the date 

17 of enactment of this Act, the Director of the Bureau of 

18 Land Management shall submit to Congress a report that 

19 includes— 

20 (1) a study of the fair market value and the 

21 amount of royalties paid on coal leases in the Pow22 der River Basin compared to other national and 

23 international coal markets; and 


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1 (2) any policy recommendations to capture the 

2 future market value of the coal leases in the Powder 

3 River Basin. 

4 SEC. 30. REPORTS. 

5 (a) DEFINITION OF FOSSIL-FUEL PRODUCTION SUB6 SIDY.—In this section, the term ‘‘subsidy for fossil-fuel 

7 production’’ means any direct funding, tax treatment or 

8 incentive, risk-reduction benefit, financing assistance or 

9 guarantee, royalty relief, or other provision that provides 

10 a financial benefit to a fossil-fuel company for the produc11 tion of fossil fuels. 

12 (b) REPORT TO CONGRESS.—Not later than 1 year 

13 after the date of enactment of this Act, the Secretary of 

14 the Treasury, in coordination with the Secretary of En15 ergy, shall submit to Congress a report detailing each Fed16 eral law (including regulations), other than those amended 

17 by this Act, as in effect on the date on which the report 

18 is submitted, that includes a subsidy for fossil-fuel produc19 tion. 

20 (c) REPORT ON MODIFIED RECOVERY PERIOD.— 

21 (1) IN GENERAL.—Not later than 1 year after 

22 the date of enactment of this Act, the Secretary, in 

23 coordination with the Commissioner of Internal Rev24 enue, shall submit to Congress a report on the appli25 cable recovery period under the accelerated cost reVerDate Sep 11 2014 01:13 May 05, 2015 Jkt 049200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\S1041.IS S1041

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1 covery system provided in section 168 of the Inter2 nal Revenue Code of 1986 for each type of property 

3 involved in fossil-fuel production, including pipelines, 

4 power generation property, refineries, and drilling 

5 equipment, to determine if any assets are receiving 

6 a subsidy for fossil-fuel production. 

7 (2) ELIMINATION OF SUBSIDY.—In the case of 

8 any type of property that the Commissioner of Inter9 nal Revenue determines is receiving a subsidy for 

10 fossil-fuel production under such section 168, for 

11 property placed in service in taxable years beginning 

12 after the date of such determination, such section 

13 168 shall not apply. The preceding sentence shall 

14 not apply to any property with respect to a taxable 

15 year unless such determination is published before 

16 the first day of such taxable year. 

Æ 


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